Growth of Banking Sector in India: A Collective Study of History and its Operations

No country can have a healthy economy without a sound and effective banking system. The Banks always remain the main participants of the financial system in any country. The Banking sector offers several facilities and opportunities to their customers and, therefore, it should be able to meet the new challenges posed by technology and other internal and external factors. With the establishment of the first Bank in India by British, the Banking sector has made rapid progress in various phrases. Before the establishment of banks, the financial activities were handled by money lenders and individuals and due to that people had to suffer a lot because of ignorance and many other reasons. So as to overcome such problems the organized banking sector was established which was fully regulated by the government. In India, Reserve Bank of India (RBI) is the main governing authority and has been bestowed with extensive powers to work as Central banking authority. The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act 1935. As it is evident that most of Indian population resides in rural areas therefore banking sector had to make a number of reforms in its working in order to survive for its existence. As from the origin of banking sector in India, continuously growth is quite evident. Nowadays Indian banking system is working very efficiently in the country. In this paper, an attempt has been made to know the history and growth of banking sector by dwelling upon its growth in various phases. This paper is a small contribution to the existing vast knowledge of banking industry and will be useful for bankers, Industrialist, policy maker and researchers.